Last night the Seward Park Housing board of directors met and elected its new officers

• President - Karen Wolfson
• 1st Vice President - Carlos Rosado
• 2nd Vice President - Fran Marino
• Treasurer -Terry MacAvery
• Secretary - Pietro Filardo

Back in November, 2004, I interviewed then SP Treasurer Terry MacAvery for the Grand Street News for a story we titled “Facing Seward’s Realities.” A while later, MacAvery resigned his office, although he remained on the board, this unlike some other, like-minded directors who just threw up their hands and walked away. It’s facinating to see how just about all the issues he was describing almost three years ago are still beging resolution, except with greater urgency. We congratulate the new president and officers and wish them much success in, at last, getting to the business of straightening out Seward’s business.

Facing Seward’s Realities
An interview with Seward Park’s new Treasurer: an honest man delivering tough news
by Yori Yanover

Seward Park Housing Board Treasurer Terry MacAvery    Terry MacAvery in the lobby of his building. Will Seward Park have sufficient funds for improvements? Seward Park Building 1 at East Broadway and Montgomery Street. Negative cash flow is foretelling hard decisions Terry and Liz MacAvery moved into a Seward Park 3-bedroom two years ago

ax attorney Terry MacAvery is a tall and slender man, with the kind of wry sense of humor one catches on to only well into the conversation. He and his wife, Elizabeth, moved into Seward Park from suburban New Jersey two years ago. I’ve met the MacAverys both professionally and socially. Liz is a frequent contributor to the Grand Street News. Terry used our magazine during the board elections at Seward to distribute an insert with his platform. At the time we prided ourselves on his victory (although we suspected some of the credit went to Terry himself). The above disclosure is necessary to help the reader judge whether or not we’ve gone “soft” on Mr. MacAvery, whom we interviewed in his capacity as the new Treasurer for Seward Park. For what it’s worth, we walked away from the interview feeling that Terry had not attempted to avoid any of our questions. And at no point did he wish to speak off the record.

Andrew Berg and Terry MacAvery are the first “newbies” to be elected to the Seward Park board. For the sake of clarity, the term covers anyone who moved in after the reconstitution of the mid 1990’s.

GSN: Do you see fundamental differences between old timers, who may have spent only a few thousand dollars to purchase their apartments, and people who have recently bought in Seward for well over a quarter million?

MacAvery: We all have the same interests. We want a place to live that we’re happy with, we want to see continuing improvements in the quality of life that we live; in the physical plant and in the operation of the buildings. Also, I’ve been pleased by the cooperation between the newer and the more experienced Board members.

GARAGE BLUES

GSN: The collapse of your garage is cited as the major reason why Seward is lagging behind on improvements. What’s the status of the law suit against your insurance company?

MacAvery: The good news is that we’ve won at the trial level. We’ve won a judgment of about $19 million, including interest, which approximates the cost of rebuilding the garage. We spent between $1.5 and 2 million on legal fees. A good choice was made before my time on the board, to pay the fees directly, and not as a percentage of recovery, and so, should we recover the money, we’ll get all of it.

“The bad news is that the decision is being appealed, and we have no prognosis as to when and how much we’ll recover in the end. Our lawyers are saying that it will take a year or two, and that we’ll recover most of the amount.”

GSN: Can you borrow against it?

MacAvery: I don’t know if we can, but we have not considered doing so.

GSN: Are Seward Park’s finances in the black?

MacAvery: We are in the black in the sense that we have cash in the bank. Frankly speaking, for the current year we are expecting a substantial negative cash flow, attributable to specific reasons. And we’re looking at a not immaterial negative cash flow for the next fiscal year as well. This month I’m convening the board members, along with an advisory board of 11 shareholders, to consider the budget I’ve put together for the next two years. I’m told this is the first time there has been a serious effort at budgeting for Seward Park.

“So the good news is we have a budgeting process in place, with vetting by shareholders who are experts in business and finance, with a view to action we may have to take. The bad news is that we seem to be spending more than we’re taking in.”

A BALANCING ACT

MacAvery blames much of Seward’s negative cash flow on the fact that the cooperative has not had an increase of maintenance charges in 13 years, while “operating expenses have not stayed flat.”

So, while Seward will not run out of cash this year, MacAvery expects that cracks will start appearing soon, as the co-op navigates its cash reserves and hoped-for capital improvement program, including the lobbies and the hallways.

GSN: Do you expect all your deficits to be erased by the insurance payment?

MacAvery: The insurance payment, assuming it’s $19 million, will have to be applied against the long-term debt, which will then reduce our cash flow requirement by about $1 million a year, and that will be of great help.

“But I’m not certain the freeing up of those funds, which now go to pay for our debt, will be enough of a means to fund capital improvements.”

GSN: Seward’s former manager, Stoney Welsh, spoke of the comfort of holding on to rental apartments instead of selling them, to bolster his operating budget. Is this a luxury you may not be able to afford now?

MacAvery: The co-op owns 12 units, which could bring in between $4.5 and $8 million. The board will be looking at the possibility of converting these units into cash. But if they continue to appreciate in value they may be the best investment we can have. We also should consider whether these apartments should be turned over to owners, rather than subtenants.

OUT WITH THE OLD STEAM, IN WITH THE NEW

GSN: We may be entering the most expensive winter in recent history, in terms of heating fuel costs. There has been a great deal of discussion regarding Seward Park’s decision a few years ago to sever its steam pipe connection to the East River Housing plant, and to move instead to Con- Edison. Since then East River, Hillman and Amalgamated have been spending significantly less than Seward on their steam. As a newcomer to the scene, do you think your board made a wise choice?

MacAvery: As you point out, the board’s decision to disconnect from East River was taken before I arrived on the scene. The bottom line is that the board intends to establish a group to analyze the move that was made and recommend decisions for the future in terms of our connection to Con-Ed. We have instructed management to take steps to preserve the connecting facility, so that, should we decide to reconnect, it will be possible to do. But, frankly, the analysis of whether it was a good decision or not, and whether better ones are currently available, is yet to be addressed. It may well be that the decision is irreversible and we’ll have to make the best of it.

SOMETHING’S GOT TO GIVE

GSN: Are your carrying charges about to go up?

MacAvery: It’s something that’s under consideration along with every other possible source of funding, should it be determined that it’s necessary.

GSN: How do Seward Park’s carrying charges compare to a similar facility on the Upper West Side?

MacAvery: They’re far lower, of course. At $500 to $700 a month, Seward Park is a bargain in terms of carrying charges. If I had to guess I would say it’s a third or less of what the charges would be in a comparable building.

GSN: Will you start charging for repairs to individual apartments?

MacAvery: At reconstitution the board decided to continue the policy of providing repairs and maintenance as before. The board also said that the policy would continue for at least five years and that a one-year notice be given to shareholders regarding the possibility of a change.

“Recently the board decided to announce that the required one-year period will begin, but I want to make clear that this doesn’t mean that we’re necessarily going to do anything, it only means that we want to have the flexibility to do something if we so choose, depending on our financial condition at that time. So out of courtesy to shareholders, and to honor the decision of the board five years ago, we did give notice that we might consider charging for repair services in a year’s time.” MacAvery is aware, of course, that the above constitutes the two least popular decisions any board can entertain: increase charges while reducing service. “The board has the responsibility to address reality,” he says, “and if reality is that our operating expenses are not covered by our carrying charges, then something has to give.”

DIFFERENT STYLES

GSN: Since the split between Seward and its sister co-ops, it has opted for a for-profit management, as opposed to the old self-management style. Which do you personally prefer?

MacAvery: I tend to lean toward professional management because a professional management company has more resources, which we would be hard-pressed to develop effectively on our own. But I remain open-minded about the issue, as I haven’t really experienced self-management in housing.

GSN: Well, in their short stint with Seward Park, the professional management company Cooper Square is on its third manager, while in the other co-ops things appear more stable in comparison.

MacAvery: Certainly, frequent changes of managers is not a wise thing to do, unless there’s a very good reason. We’re always looking at whether or not we’re satisfied with the level of services that we’re getting from our management. Believe me, they get a lot of heat from the board.

MacAvery cautions that none of the decisions he’s reviewing with us are written in stone. In fact, the board and its resident financial experts are in the process of considering them, which is why he wants them aired. He does not expect his hard solutions would be greeted very favorably. But he wouldn’t have it any other way.

“Seward Park may be, at times, more cantankerous than other co-op communities,” he says, “but I’m proud of our democratic environment, and part of the fun of democracy is its messiness.”